Correlation Between Mastercard and Lexinfintech Holdings
Can any of the company-specific risk be diversified away by investing in both Mastercard and Lexinfintech Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mastercard and Lexinfintech Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mastercard and Lexinfintech Holdings, you can compare the effects of market volatilities on Mastercard and Lexinfintech Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mastercard with a short position of Lexinfintech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mastercard and Lexinfintech Holdings.
Diversification Opportunities for Mastercard and Lexinfintech Holdings
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mastercard and Lexinfintech is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mastercard and Lexinfintech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexinfintech Holdings and Mastercard is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mastercard are associated (or correlated) with Lexinfintech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexinfintech Holdings has no effect on the direction of Mastercard i.e., Mastercard and Lexinfintech Holdings go up and down completely randomly.
Pair Corralation between Mastercard and Lexinfintech Holdings
Allowing for the 90-day total investment horizon Mastercard is expected to generate 4.37 times less return on investment than Lexinfintech Holdings. But when comparing it to its historical volatility, Mastercard is 3.14 times less risky than Lexinfintech Holdings. It trades about 0.3 of its potential returns per unit of risk. Lexinfintech Holdings is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 580.00 in Lexinfintech Holdings on November 1, 2024 and sell it today you would earn a total of 252.00 from holding Lexinfintech Holdings or generate 43.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mastercard vs. Lexinfintech Holdings
Performance |
| Timeline |
| Mastercard |
| Lexinfintech Holdings |
Mastercard and Lexinfintech Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mastercard and Lexinfintech Holdings
The main advantage of trading using opposite Mastercard and Lexinfintech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastercard position performs unexpectedly, Lexinfintech Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lexinfintech Holdings will offset losses from the drop in Lexinfintech Holdings' long position.| Mastercard vs. American Express | Mastercard vs. Upstart Holdings | Mastercard vs. Capital One Financial | Mastercard vs. Visa Class A |
| Lexinfintech Holdings vs. Visa Class A | Lexinfintech Holdings vs. PayPal Holdings | Lexinfintech Holdings vs. Mastercard |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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